5 Important FACTS You Need to Know About Flipping Cars

1. Flipping cars is illegal!

2. It’s a violation of your state laws

3. It can include possible federal and state tax fraud!

4. It may have heavy fines or jail time associated with it!

5. Flipping cars could stop you from ever getting a dealer license

Don MasseyA Colorado Dealer

I hope I have your attention. I’ll explain the 5 facts about flipping cars!

But first, let’s define what “flipping cars” means.

The agreed on general definition is to buy and sell cars without a dealer license. Another name for it in the auto industry is curbstoning. This comes from the fact that individuals who want to sell a car usually park it at the curb with a for sale sign in the window.

The California DMV says…. Curbstoning is the repeated, unlicensed “flipping cars” for profit. Curbstoners are people who actively and regularly buy and sell vehicles without a license, proper permits or a legally established place of business and who, many times, represent themselves as private sellers in order to attract buyers.

So on to the 5 facts….

Flipping cars is illegal!

To buy and sell cars, for profit, without a dealer license, is illegal in EVERY state. Some states MAY allow a minimum of sales without a license. This is usually 3-6. Check your state’s requirements. Many states set the number at absolute ZERO (California). Don’t blindly follow what you read on the Internet blogs and forums.

As an example here is what Georgia’s FAQ website states:

I thought I could sell up to five vehicles in a year before I had to be licensed?

The “five cars per year” statement has been misinterpreted by many people. The origin of the “five car” phrase is the Used Motor Vehicle Dealers’ and Used Motor Vehicle Parts Dealers’ Registration Act. O.C.G.A. 43-47-2 (17)(A) states that “…the sale of five or more used motor vehicles in any one calendar year shall be prima-facie evidence that a person is engaged in the business of selling used motor vehicles.” This means that evidence indicating that a person has sold five or more used motor vehicles in any one calendar year can be used to show that the person is engaged in the unlicensed practice of used motor vehicle sales. This statement should be read in its context, and should not be misinterpreted to mean that a person may sell up to five vehicles in a year before becoming licensed.

It’s a violation of your state laws!

The auto industry is one of most regulated industries. Both in manufacturing and sales. Why the sales side regulations? A car is the second most expensive purchase a consumer makes. A home being the most expensive.

To protect consumers from being ripped off, states have passed dealer licensing regulations and rules.

The states have inspectors to monitor curbstoners. They track by title transfers using names and addresses in the state DMV database. They check Craigslist for repeated sales by individuals.

Watch this video. It’s a California state investigator speaking. He reflects the attitude of other state’s investigators about car flippers.

If you’re selling cars, as a business for profit, without a license (flipping cars), your state considers you a curbstoner and will take legal action against you.

It can include possible federal and state tax fraud!

Some car flippers will slip a title or use an “open title”. This means they never register the car in their name. They leave the buyers info on the title blank so they can fill in the name of the person they resell it to.

When a car flipper buys a car he is the new legal owner. EVERY state requires the flipped car owner to register the vehicle, obtain a new title and pay fees and taxes. To not do this is tax evasion.

When an invidual or business sells vehicles for profit they must also pay state and federal income taxes on their profits. To not do this is tax evasion.

It can have heavy fines or jail time associated with it!

Here’s Georgia’s statute (O.C.G.A. § 40-2-39.1 – GEORGIA CODE)

(g) Any person who violates this Code section shall be guilty of a misdemeanor and,upon conviction thereof, shall be subject to a fine not to exceed $1,000.00 for each violation or imprisonment for a period not to exceed 12 months, or both.

South Carolina law is: If you operate as a dealer, wholesaler, auto auction, or transporter without the proper license, you may be convicted of a misdemeanor and fined up to:

1. $200 and/or imprisoned for up to 30 days for first offense.

2. $1,000 and/or imprisoned for up to six (6) months for second offense.

3. $10,000 and/or imprisoned for up to two (2) years for third and subsequent offenses.

ALL states have similar stautes, fines and possible imprisonment for violating dealer licensing laws.

So follow what the YouTube videos and “flipping cars for profit” web sites are saying and you could be toast!

Flipping cars for profit could stop you from ever getting a dealer license!

Most states will deny an application for a dealer license if the applicant has been found guilty of past fraudulent actions concerning the sale or lease of motor vehicles. As an example here is Arizona’s law.

An applicant convicted of fraud or an auto-related felony within the last ten years or any other type of felony within the last five years will have his or her license application denied.

SO WHAT IS THE ANSWER IF YOU

WANT TO LEGALLY

BUY AND SELL CARS?

Obtain Your Own Dealer License!

FINALLY REVEALED:

The EXACT Formula I Used ToQualify for My Own License and…..You Can Use It, too!

There is no experience necessary, no expert skills required, anyone, including you, can do this. Just take a few minutes to find out how today…

Comments

Flipping Cars — 91 Comments

Yogi
There is only one alternative. Obtain a dealer license so you’ll not have to worry about buying and selling vehicles illegally. Plus you’ll have access to true wholesale priced vehicles at dealer only auctions. The best to you in your endeavors.
Don

bought a car back in sept 2012 and i mailed off the title to DMV so I can register it in my name and my daughters name and we have been waiting for 10 months for some kind of information about what fees we will have to pay. It comes to this: This car was flipped, the guy we bought it from made it sound like it was his, and he said he paid for reregistration and smog. Well, I went to DMV yesterday and DMV couldn’t release any info on the car,because on the car the registration’s hasn’t been paid since 2011, thru 2013 and the guy told me that the car was smogged and it wasn’t. I just got the paper work today June 29, 2013. Where do I go from here?

So sorry to hear about your problem with a flipper. You are completely at the mercy of the DMV. I would go back to the DMV and escalate your issue to a supervisor. If you’re not happy with the answer he/she gives you then ask to speak to their superior. Just keep moving up through the ranks until you find the answer.

As difficult as it may be, DO NOT get mad or verbally attack the each level of the bureaucrats. They only know how to talk in their language. Make a point that because of this flipper you have a vehicle that you can’t drive and just need it. Can they help. That’s all you want.

If that gets nowhere ask them who or what government organization can you go to for help. This sounds like a violation of laws by the flipper. I might go to your local District Attorney’s office if the DMV is of no help.

I purchased a car off of craigslist for $1000.00. When I took the title to the BMV, I could not register it because it was under the company name where my signature had to go. Tried to contact the people and the lady offered to take the title back and fix it. She told me to meet her in the back of a hotel. My husband said no, because if she takes the title, I wouldn’t have a legal leg to stand on and I would never hear back from them. as it stands, I still Have yet to hear back from these people. Now what????

If I were you, I would consider asking for your money in exchange for the car and the title. Buying cars on Craigslist from individuals can be very problematic as you have found out. I’m sorry for your situation. I wish I had an easy answer.

Of course it’s not illegal for individuals to sell their private cars. That is a private transaction.

Flipping cars is where an individual specifically purchases a vehicle for resale. That is a business transaction and is covered under the laws in a state regulating vehicle sales to the public. It is illegal to buy and sell cars for profit without a dealer license. Period.

This year I have sold 5 vehicles. Recently I titled 2 one I did not get tags for, because it was intended to be a gift for my niece. She did not like the car so I sold it. But are you saying if I purchased a car and title it and pay the sales tax, the Motor Vehicle Board can’t say I am trying to buy and sell cars? I don’t buy and sell cars I just have sold a total of 5 cars this year to downsize. But thats legal?

Have you heard about the company Dealer Licensing Consulting? They are telling me that they charge me a monthly rate, which will allow me to buy and sell vehicles under their name, and then they 1099 me at year end… Is this legal?

It is legal when applied according to the laws in your state. Let me use my state as an example to decide whether this would be an option I would consider. Note this is called a “Shared dealer’s License Program”. I would NOT have a license. I am on the LLC and probably would be issued a 1099.

The problem is NOT what they say is OK but what YOUR state says about the program. Pass it by your dealer licensing organization.

As an example this program could put me in an illegal position with my state if I was not aware of the rules of the dealer licensing board in Colorado.

Yes, I could go to auctions and purchase. Because I would be registered under the dealer license in the program. This is not a state or federal concern. This is a RULE that ALL auctions have. Why? Because they cannot sell to the public. Why? Because they don’t have a dealer licenses to sell to the public. So THEY, the auctions, require the DEALER license to screen out the public.

So now I can go to the auction but…. in Colorado I can’t sell them under my name. I can’t sell them from my home. The cars I purchase would be assigned to the dealer in the program. I would have to keep the vehicle at the dealership and show it there and the actual transaction would have to take place at the dealership.

So please CHECK with your state licensing organization before entering into any of these dealer programs.

I’ve been thinking of dealing cars in my home state, Tennessee. I’ve read the by-laws about doing so and you even mention the “5 car” mandate. What I’ve read is that if I go beyond the 5 car limit, that I have to have a lot that fits so many cars. Of course I want to get my license before I proceed, but is there anyway I can forgo having to pay for a lease on a lot? My hope was to sell 4 to 5 cars a month and use,for the most part, the auction as a resource. I simply want to sell them at a wholesale price and with an “it is what it is” mentality. Any advice?

Thanks for your question. If you review the requirements for a license in your state, you’ll find it does not say you have to a “lot”. It states requirements for your business location but think out of the box. Find a cheap location that meets the requirements, not what you think a car lot should look like. I would consider a co-location with another business. I have a friend who is co-located with a garage and a barber shop! It’s a business location that meets the requirements of the Colorado dealer licensing board which are much like Tennessee’s. Not beautiful but it works.

I know of another dealer located in a commercial storage unit location. The difference is, the doors are garage doors, a 20×40 interior space and public restrooms.

Again, search for places that meet the requirements, not your preconceived notion of a car lot.

I have been a victim of having a vehicle sold to me that was not in their name. It was advertised as clean title and once funds were sent (from Europe, my home) and I received a copy of the title it showed a different name. They purchased the vehicle in 07 it’s now 2013. The shipping company will not ship the vehicle as laws state for customs that it must be in the sellers name . I doubt they will change the title or refund me. Help! Who do I go to? I have names addresses and phone numbers and a Facebook contact for one of them. Advice appreciated

Please help me out. My friend sold her used jeep with a blown head to a young girl who said her dad was going to fix the car the head was not a problem. A couple weeks later she got court paper some guy is claiming she sold him the car. He wants the money back he claimed to have paid for the car. Arizona does not require information on the buyer, just the registered owner. The girl told the man she was my friends daughter and was selling the car on her behalf. MVD issued a notarized title with the purchasers name blank and the selling price blank. three days later the car was sold and the notarized title and bill of sale had all the blanks filled in. Please help. She just wants this guy to go away. He was scammed but not by her.
Thank you.
Lynn

The back of the Arizona title is to filled by the SELLER to transfer ownership. There IS a buyer’s section and a seller’s section both to be filled put by the SELLER. If your friend did not put the name and address of the young girl she sold it to then SHE created the opportunity for the “flipper” to sell the car without registering it. I’m sorry I don’t have any advice except for talk to the DMV. Bases on what you’re saying, your friend did not complete the transaction according to your state regulations and that’s why the guy thinks your friend sold him the car.

Hi Don, I am based in north VA and I am intending to start this kind of business. I thought about getting a dealership license sinec I look to my stuff to be legal all times. the only thing that bothers me in the equation is the BOND.. I understand it as to freez 25,000 for 3 years. with this amount of money I can sell and buy lots of vechiles in three years. the other thing is to pay for the rent of you intended location for at least 3 to 4 months before have your license… this is along time to get into bsuiness. is there any kind of tools to expediate this?

Thanks for the information presnted in your add here.. it was really helpful..

I just bought a used car from a private seller and we realized after the fact that it was flipped. The owner(of 3 weeks) lied about everything. You mentioned Georgia’s statute and South Carolina laws concerning this crime, could you help me find if Utah has a similar law or statute? We are trying to figure out what to do. Thank you

Shellie
Without knowing all the details I can only recommend you contact the Utah Motor Vehicle Enforcement Commission and file a complaint. Their telephone number is 801-297-2600.
Sorry to hear about your problem. Good luck in getting it resolved.
Don

I don’t quite understand your question. You buy a car and sell it for profit, then you owe the IRS taxes. You buy a car and don’t sell it, then you owe no taxes. A part of the selling process is signing the title over to the new owner.

If you are selling cars for profit then you are operating a business. Your business must meet the statutes for your business in your state. As a business you are to be licensed in your state, county and city. And as with any business you are responsible for reporting income to the IRS and paying applicable taxes.

Let me put your question in a different format. “So I’m confused is buying and selling houses throughout the calendar year with the intentions of making large tax free profits illegal”?

I bought a truck a truck from a flipper, they covered up the frame with bando and painted it so the buyer won’t see that it is completely rusted. Now he wont take it back, what can I do about? This is in Illinois.

There is not a lot you can do about the truck or getting your money back. When anyone buys a vehicle it is sold and bought as-is. That’s why it’s important to have a vehicle checked before purchase or buy from a business or someone you trust.

If you’re for sure this person is a flipper you can report him to the State of Illinois dealer licensing in Springfield at 217-782-7817.

I would like to get in the business of flipping cars legally. I heard that rather than getting a dealer license, you could register as a agent of a dealer. Could you explain how that works? Are there any pitfalls to becoming an agent instead of getting a full blown dealer license?

There is no such thing an “agent” of a dealer. Go into any dealer and ask to be an agent for them. No, please don’t. Dealer’s have owners and employees. No one “agents” for them. A sales person is as close as you’ll get to being an agent for a dealer.

There is so much mis-information on the Internet about selling cars, agents, flipping cars, renting a license. You have mis-informed folks on forums, chat groups and on Ask.com, Yahoo questions etc etc just adding to the “noise”.

Read all the pages on this site to see some of that mis-information and how it affected folks.

There is no half-blown license to buy and sell cars. If you want to sell cars to the public you must be licensed in YOUR state, not another state 500 miles away. You can’t be an agent. No dealer would jeopardize his license to put an inexperienced person on his license. Plus it would take approval by the state, insurances and bonds would all have be changed. When a person is on a license they are the OWNER(s) of the license and the business and liable for all.

Now…. is it an impossible thing to obtain a license? No, it is possible, with guidance, to obtain a license with the minimum requirements. And that’s what my eBooks are about. Learn from a licensed dealer, not from Ask.com or someone “selling” you a several hundred dollar package or monthly fee.

There are guys who have invested in my resources and got their licenses (see testimonials) and to be honest, most say, no way. So are you a risk taker or curious? They’re $27 and you get FREE consulting. Why FREE, read the FREE consulting page.

It’s me THE Don Massey but not THAT Don Massey! You’re funny, Roger. For others reading this…. Don Massey owned several Cadillac stores around the country. He was headquartered in Plymouth, MI. He built stores all over the country. At the end of the last century his annual says were almost a billion dollars. He died at 83 in 2011. He was fondly called, “Mr Cadillac”.

I’m asking on behalf of a friend who has sold about 100 cars each in Washington State, Arizona, and Michigan over the past many years, and now wants to clear up the mess he’s in (for illegally selling cars, not paying taxes, etc.). What does he need to do to settle these problems with the right authorities?

I’d like to get a dealers license so I can “flip” cars, but here in Utah you need a designated area for advertising, a 24 square foot sign and $75,000 bond. Is there something I’m missing? I don’t want to make this a full time business, there’s enough bad dealers around here, I just want to buy cars cheap, fix them and resell them without any troubles.

Yes, you must have a business location. You can find an inexpensive one ($300-$400) a month on Craigslist. You can co-locate with another business such as a mechanic’s garage as long as you have your own business area (office) with an outside entrance. A 24 foot square sign is a 4X6 piece of plywood with your business name painted on it. My $50,000 bond costs me $375 a year.

I go into all these choices and alternatives in the e-book. Most guys interpret the state statutes as “I must have a lot”. There is no mention of a car lot in the Utah rules. I show you how to think out of the box.

I have an acquaintance who rents a commercial storage building that meets the definitions as you noted for Utah. How about parking for three cars? He parks them inside! There is no state that rules that vehicles must be parked on an outdoor “lot”. Thinking out of the box. Fulfill the requirements, don’t build a car dealership as you see in your mind’s eye.

And I could go on and on and on… it’s all in the book(s).

As I read the requirements in Utah, you can easily do what you want to do.

You do not need a lot as you are envisioning it in your mind. Here’s what the State of Arizona requires for business location:

“Established place of business must be a permanent enclosed building or structure, owned either in fee or leased, with sufficient space to display two or more vehicles of a kind and type that the dealer is licensed to sell. The established place of business must be devoted principally to the business of a dealer.

A used motor vehicle dealer, public consignment auction dealer or automotive recycler may use a trailer as an office.

A wholesale motor vehicle dealer may operate from a location zoned for residential use. Applicants should contact their local city or county office to ensure compliance with local zoning ordinances”

You need to find a place that meets the requirements. It does say you need a lot. Example, couldn’t the spaces be inside. I see places for rent on Craigslist everyday that meet these requirements and they don’t look like “car lots”.

It’s such a catch 22. You have to be rich to get a dealers license really. That’s not free market economics. They want you to have a lot with a restroom and all of that before you get your license. They have to inspect the dealer lot as well first. Then you can apply for the license. So you have to jump through a bunch of hoops to get it but to get it you have to make money first but you can’t make money without the license to afford a lot. Catch 22.

I have to kindly disagree with you. You’re seeing only roadblocks. In my ebooks I show examples of overcoming them. I show you that you don’t need a “lot”. You need to have a business locations that meets the requirements of your state. I know of a dealer whose “lot” is a commercial storage building for small businesses and contractors. It looks like the storage rooms you see for individuals except they are 20X40 with large roll doors on each end to drive vehicles into. They have shared restrooms. His parking spaces are inside the building. He pays $400 a month. You just sign a lease for your “lot” with the option, it is valid only after you receive approval for your license. You do not have to be “rich”. You don’t need any more money than you’d have to pay for your first car whether you have a license or not (flipping cars).

How about co-locating? I have an acquaintance whose “lot” is with a local mechanic’s business.

I have a wholesale license which I can operate in my home. This is an optional dealer license I explain in the eBooks.

Just a comment. If someone has been a victim of a curbstoner and can’t get satisfaction from the seller, they should contact their local DMV to file a complaint and get help from their local investigations unit. It will probably require legwork by the buyer and fees.

Great subject! Here in NJ , the state doesn’t take any actions at all. On Craigslist 90% of sales are title flipping. We , legal car dealers, pay for rent, insurance , bond and our taxes but seems they do better us since pay no expenses like we do .

Thanks for comment. You can’t believe the number of negative comments I get that you are the bad guys along with the government. The “victim” complex in our society is so sad. They don’t realize the average dealer is the small independent lot working hard to make it everyday. Started by a person who never saw themselves as victims but worked to be successful.

Sir, do i need to have a dealer license of i buy car from you and sell it to Europe without bringing it back home?
Its about classic car! And also if i sell the car directly to the buyer overseas from the previous owner how do I need dealership place of i don’t have any cars at my state?
Thanks
Ivan

Based on the short amount of info you provide, no you don’t need a dealer license. If you buy a car however as an individual, you must register and title it and pay fees and taxes. You need that title in your name to for US customs to approve the shipment. That takes some time, so I don’t know what you mean by not bringing it back home. You’ll have to have it on your personal auto insurance, also. They will usually want to see the vehicle. When you get the title, you can sell the car to a foreign buyer easily. If you have any problems it will be with the country you are exporting the auto into. Most countries have some restrictions on imported cars.

If you are going to do several of these transactions a year, you need to contact your DMV to see if requires you to be licensed as a dealer. States require licensing for companies doing US transactions only but you need to check. Rules regarding vehicle dealers are modified or changed every year in every state.

You cannot RENT a license. The companies that sell “get you a license” for a monthly fee are pairing you up with a licensed dealer.

What this dealer will do for you depends on the dealer. I’ve seen some just put you on the auction list and that’s it. Other’s register you as a salesman. some add you to their LLC.

First caution…. the dealer you pair up with MUST be in your state. Why? Because you cannot sell cars located in your state with another state’s license. North Carolina regulations frown on that. Everyone asks; then how do they sell on the Internet. Internet dealer car sales are made at the dealership. They don’t sell ON the Internet. They ADVERTISE on the Internet. They show and sell AT THE DEALERSHIP. If someone decides they want the car sight unseen from a distant location, the the paperwork is done AT THE DEALERSHIP and sent by overnight FEDEX. After signed documents and payment is received by the dealer, the vehicle is shipped to the buyer.

Second…. If you have a dealer’s license or are on another’s license, you cannot sell cars from your residence. The transaction must take place at the dealer’s physical location.

If you are legally licensed as a dealer in your state you can find cars for buyers. Dealers do this everyday. A broker ONLY finds cars and the sale is made by the dealer that negotiated the best deal with the broker. The buyer pays the broker a commission. I know of “brokers” that have dealer licenses but all they do is brokering.

When you as a dealer or a registered rep buy a car at auction, the title is assigned to the dealer. Note: If one of these “dealers’ you sign up with gives you access to auction, you are not bidding in your name. You are bidding with the account set up by the dealer. So the auction will not do title transfer work to an individual. Title assignment and title transfer are two different title processes.

Before you sign up for ANY dealer licensing program make sure you understand the laws and statutes IN YOUR STATE. Since you will be selling vehicles in your state, you must not be in violation of its statutes.

Why not explore getting the license on your own? My resources show you how.

We have the other end of the problem. We sold our car in Seattle in March 2014 before we moved to Japan (long term). The buyer never registered our car and we continue to receive tickets, fines, etc and even from collector’s agent. Every time we call the municipal court, they would clear our name but the problem continues. What can we do? Thanks.

Sorry to hear about your problems. If you have friends in Washington I would ask them to contact the title division of the DMV and ask how does a owner remove his information from the title records. They can also call the vehicle licensing department and ask how to have your information removed from the license info on file in the DMV database. Of course your friends should explain why this needs to done and what paperwork is required from you. Hope this helps.

I recently (days ago) sold my truck to a buyer who fits the profile of a curbstoner. He listed it for sale in online classifieds the same day I sold it to him and he is making claims about it that I know to be false). Like an idiot, I didn’t make sure the Bill of Sale/Title was properly filled out when I made the sale. Assuming he finds a buyer, that sale would show me as the seller and I can see potential problems for me arising such as traffic violations, bad sell claims, etc. similar to others’ posts. How do you suggest I go about protecting myself and potential buyers?

Sorry to hear about your situation. Anyone selling a car, as an individual, should check with their DMV to check the paperwork requirements. You have an option you can explore.
It’s called a “Release of Liability” or “Notice of Transfer” form. It is a notice to the DMV you have sold a vehicle and this is to formally inform them you are longer liable for any issues after the sale. Some states require the form to be submitted upon a sale by an individual. Many do not but it may be an option you can exercise. Check with your DMV.

So let me get this straight. I can buy a vehicle today, title and register it in GA, sell it next week, claim any net as income and Im good. But if I decide to sell my personally owned, legally registered property 5 times in a calandar year in GA, then I broke the law? That doesnt sound right to me. Private citizens must have the right to sell or otherwise do what they wish with their legally owned property without fear of retribution because “auto dealers” feel infringed upon. I can sell as many houses as I want in a year without a realtor or a realtors license as a private seller.. so the idea that a vehicle is your second largest investment and buyers need protection is bunk. I understand the desire to protect buyers, but what about my rights? To get a dealers license in GA is a hefty monetary investment that dooesnt begin to be offset by the $1k-$2k one might profit by selling that 5th vehicle in a calendar year. That just doesnt sound right to me. Im not trying to take advantage of anyone but Im mechanically inclined and always looking for a good deal I can make a few bucks on… and I can do that 4 times in a year completely legally, but the 5th time earns me a fine and jail time. This seem ludicrous.

Seth
Yes, eBay has a whole section dedicated to dealers on eBay Motors. The tool is called “Dealer Center”. On Craigslist, when you list a vehicle for sale you list is an an individual or dealer selling it. It’s interesting your dealership does not use these forms of selling on the Internet.
Don

i have a huge problem. I purchased two cars from some people in the state of Oklahoma, who I have realized are flippers. They go to sales and auctions and get repo’s stuff like that. I do not believe they have a dealers licence. They were unable to locate the titles to these cars. They gave me notorized bills of sales, which due to new laws in Oklahoma do me no good to obtain titles. I did obtain from tag agency information on the previous owners, which I’m trying to find to help. They agreed to trade the two cars I got for two they had the titles for, which they are now giving me the silent treatment and run around. One of the cars has an active lien on it from Georgia! How do I report these guys and get them shut down. What do I do?

Annette
Sorry for your problem. You can report them to the Oklahoma Motor Vehicle Division at (405) 521-3600. The issue you have with these “flippers” or “curbstoners” in most states is not a criminal issue but a business dispute between the two of you i.e. a civil issue requiring lawyers! The buying and selling of cars without a license can be a criminal issue. That will have to be determined by your state’s licensing agency when they investigate your complaint.
Don

You can sell legal car without a license upto a certain amount (8 cars is my state limit) before having to get a license…then when over the state regulatrd limit is when you will get penalized…..what he is talking is giberish

Jason
Thanks for your comment. You’re right about your state but not all states have that high a limit. At the 4:00 – 4:12 minute time in the video, I say you must not believe everything you hear or read on the Internet (including me) and to educate yourself by contacting your state dealer licensing board. In my state it is zero. Georgia is zero. California clearly states if you buy and sell cars for profit, the seller must be licensed. Many states it is 3 to 4. So the dream to have a part time business flipping cars is not viable in most states because of the few cars that can be turned in 12 months.
I have found sites and forums on the net which recommend floating or having an open title. That’s where the flipper does not put his name or info on the title but waits until he sells the vehicle and then puts the next buyers name on the title. Then the flipper does not have to pay any state taxes or fees and there is no paper trail that he owned the car. I always ask these guys what do you do about insurance. They usually say nothing. So they are driving a car still titled to the original seller with no insurance. I have have talked to original owners who start receiving letters about past due traffic fines or accident claims because the title is still in their name. The new buyer just didn’t register it.
I’ve seen flippers who put a lower price on the title than what they sold it for because it helps to reduce the fees and taxes. All the tiles I have seen, clearly say that it is a felony to sign it with false information.
Flippers who ARE following state guidelines usually never report the income of their side business. The sad part of this, I’ve talked with guys who did NOT KNOW the legal aspects of flipping cars, got caught, were fined by their state and then had to pay IRS penalties on unreported income. And I’ve had many flippers to tell me %%$^@%#^ %%#^%$ and my wife, too. I just say, why not explore the possibility of being licensed. It’s not as hard as you read about on the net.
Don

Thanks for your comment and sorry to hear about your problem.
Yes, it is illegal for someone to lie in a business deal BUT it usually falls under civil law, not criminal law, because it’s a contract issue. And if it’s a “he said, she said” with nothing to prove the property was sold under false premises then it becomes impossible to prove.
And a civil law violation must be handled through a lawsuit where you have to hire a lawyer.
There MAY be some rule/law in your state to address your issue. The best thing to do is contact your state’s organization that licenses dealers and see if there is a rule/law about individuals lying about the vehicle (age) when they sell it.
Here is another one of my websites where you can find the telephone number and website you need to contact. Don’t spend anytime on the website, it will not contain your answer. Call them. http://dealer-license-requirements.com

You are the real deal, with great advice and knowledge. EVERTHING I have read from Don here is spot on.

I own a small retail dealership in Phoenix as a side business (fully licensed, bonded, insured). The curbing problem in Arizona is simply out of control. The legislature passed a new law last July with a $3,000 fine plus lost taxes for dealing without a license, but it is a joke how understaffed the Dealer Licensing Investigations Unit is in this state. Most of the curbers are both buying and selling their “inventory” off of Craigslist, but the trend that amazes me is how many dealer auction cars purchased at dealer auctions through a wholesale dealer license find their way to the retail market. I believe there are many third party MVD companies are illegally transferring title to private parties for them (Arizona farms out some MVD services to private business–I use a great, legitimate one myself for my dealership titlework).

The “open” title ability (although it is technically illegal to leave a title open when selling privately in Arizona), and the total lack of enforcement of the time limit in which a private buyer has to register/title a car (I believe it is about 10 business days in this state) compounds this issue.

Anyway, I would be interested in speaking with you sometime. Please mail me privately, if you have the time.

Thank you for the kind words. There are so many flippers and curbstoners who use all kind of excuses to justify their unethical and illegal business practices. “They are just the little guy trying to make a living.” They disregard that you are as a small retail operation also the little guy trying to make a living LEGALLY. And so many of them sell crap. I received so many comments from individuals who have been ripped off by buying on Craigslist. I don’t post those comments but do answer them directly and try to provide guidance.

Many states do not have the resources to find the illegal operators. And I’ve had “flippers” say, “Well, they can’t catch you anyway”. So this person is saying, “I’ll sacrifice my personal integrity for money”. Anyway…. enough said.

I live in Wisconsin and am on the border of Minnesota and am interested in getting my license. I believe I would be buying and selling heavily in and to Minnesotans. will a Wisconsin license allow that. also in respect to the business location (the commercial front required by law to get said license) is that required to be kept for ever to retain my license or if I am unable to pay the rent down the road will I be able to still sell cars. I am disabled and am just trying to help my family get by. I would keep up on the bond and other requirements but being I only plan on selling 5 or 10 cars a year will not need the location(in my eyes at least). I understand the governments point as far as they just want their cut and make sure people don’t get screwed but its a little redicules to say you HAVE to have a location no matter how inexpencive you say it can be to just sell a couple cars a year to help your family. Times are tough all over and these laws are making it harder and harder to make a couple bucks. I don’t want to start a damn company I want to sell a few cars. why cant their be a license for the guy that wants to sell say less then 8 cars a year to make a buck and another for the guy that wants a full fledged car lot. Sorry I know don’t shoot the messenger lol. Thanks in advance Clayton

Clayton
You are fortunate, Wisconsin allows an individual to buy and sell up to 5 vehicles per year of their own vehicles. What this means you have to register, license and pay all taxes and fees on the purchase of the vehicle you own as an individual. Why they clarify this is because there are “flippers” who never title the car in their name they are selling. They do this by asking the seller to not fill in the buyers name on the title…. “I’ll take care of that later”….. SURE. The they put the name of the person they sell it to on the title. That is completely illegal in every state because the “flipper” is not paying required, by law, fees and taxes.

And the reason for the regulations on sales of vehicles is to protect the consumer. Why? It is something everyone must buy. It’s usually the most expensive thing they buy except for a home. With no regulation, there would be every Tom, Dick and Harry selling cars on corners. No written contracts. No investment by the seller in a brick and mortar business. No recourse for a buyer that gets cheated. And I could go on and on.

So in Wisconsin you can sell a couple of cars a year, in fact 5 to help your family. BE CAREFUL! A car is not just a car. It’s a brand, model, age mechanical condition and mileage. To be successful you have to be savvy in all these areas. Watch this video… https://www.youtube.com/watch?v=mBvXM_S-t_8 He does a great job of explaining why it can be difficult.
Good luck…

Don’t forget that’s 5 per year. This year is almost half over… That would be 10 through the end of 2016.
Don

Hi Don. I own a non auto related business in Hawaii. I have four C-corp company owned vehicles. All of the vehicles are paid off and depreciated on our books and it is time for us to acquire new replacements. I wish to transfer ownership of one vehicle to an employee at no cost or exchange (more as a gift/bonus so my CPA did inform me I still have to pay tax for the fair market value which is fine with me). I would like to sell the other 3 vehicles to a private party for nothing more than low private party blue book which I will need to do to show that I did not liquidate a corporate asset for nothing. Would this be considered legal as we are not looking to profit and these vehicles are all 7 years old or older and bought for the purpose of business use (not for short term flipping or intent to profit). Hawaii has a 3 per year limit rule.

Note: In case you are wondering why we don’t trade them in against our new purchases, we are located on one island and making purchases from a dealer on another island who is willing to pay for interisland shipping of the new purchases. But it’s not sensible or worth the trouble for us to ship our old vehicles to the other island for the purpose of trade in when we can accomplish the same by selling to a private party.)

Kay
States usually have no issue with a business liquidating their vehicles. Go to my website http://dealer-license-requirements.com. It is a site that gives links to all the state government licensing groups. Click on the Hawaii link. It will take you to the Hawaii Department of Commerce and Consumer Affairs. There are telephone numbers for each island that you can call to get the answer to your question.
Don

I have a small business where I import niche market cars that are 25 yrs old for customers. I don’t actually own the cars i am just the middle man who helps set up the deal to purchase a car at japan auction then i do all shipping and customs. Do i need a dealers license?

Justin… Very unique question! You’ll have to contact your state licensing organization. I don’t see you as a dealer but a state may consider you a BROKER, which some states license.
Go to my website: http://dealer-license-requirements.com and select the link for your state. Don

Thanks for sharing all this valuable knowledge. Can you kindly answer this below question that was asked by someone else.

Respect to the business location (the commercial front required by law to get said license) is that required to be kept for ever to retain my license or if I am unable to pay the rent down the road will I be able to still sell cars.

I live in TN. We do have a statute which limits individual sells to no more than 5 per calendar year. TO me, that statute would not include an LLC, as it is not an individual, but rather comprised of members. Do you know if a vehicle title with a listed LLC business can sell a vehicle legally?

Kristen… Your logic is correct. A business that is selling a car that is listed as an asset in its tax records would not be required to have a dealer’s license. But one never knows how the state licensing agencies would interpret the sale so I recommend you contact the Tennessee licensing group. Don

I bought a car from a guy back in 2013 on craigslist with a salvaged title he never registered the car in his name the title has an insurance companies name on it and I am having the hardest time registering it to get stickers haven’t really been able to drive it and I’m not sure what to do at this point. I would like to just get rid of it but can’t sell it without it being registered. I’m pretty sure this guy flipped this car. Any advice that would help me get the money back or selling it. I do know where the person is located but it’s been a year already how do I approach that

Andre… Sorry to hear about your problem. It’s one of the reasons to not buy from flippers and to not become a flipper. The only advice I can give you is contact your state’s dealer licensing group to see if they have any ideas applicable for your state. You can find the website and telephone number for your state here: http://dealer-license-requirements.com
I would call them. Not spend a lot of time on the website. Good luck.
Don

I had mistakenly bought a flipped car from a woman last week.It had false registration tags on it which I found out later while trying to change titles as she lied about it being smog-ed and registered. my bad. I accept paying the extra for my mistake. However, with more investigation on this woman I found someone else online who she also con-ed and from both his and my story, this woman does this a lot. She accidentally left papers in my car proving that she had bought the car from a lien sale ten days before she had sold it to me, though she claimed she had the car for a long time and used it for work. My question is how do I bust this lady? Will the dmv do anything about it? Can I go through law enforcement? This lady saw that I had just came from my job at the hospital, saw an early twenties girl that was gullible and in a bad place, and had no qualms about selling and unsafe car to me knowing I would have a long drive home. I don’t want her taking advantage of anyone else.

Cora… Sorry to hear about your situation. This woman and people like her are the reason that states have licensing requirements. The only thing I can recommend is to call the dealer licensing department in your state. They might be able to help. You can find the contact number on my website at: http://dealer-license-requirements.com Good luck. DON

Sorry Don, but that is honestly one of the dumbest videos I’ve ever seen. If I buy a car, drive it for a month and decide to sell it, how the hell are you going to prove I was trying to “flip”anything?

Jim
You’re not the first to say that! Other comments have gone ahead and attacked me, my wife and mother. Really! Why would someone do that? Usually because they are flipping multiple cars a month. Because you did not do this, I will leave your comment and answer it.
You’re absolutely right if a person buys ONE car and resells it intentionally for profit as a business deal, how can anyone prove it. It can’t be done. If you buy and sell 4, or 5, or 6 in a year then you can be found. Here’s how. The DMV in your state has programs in the title registration computers that flag multiple title actions at the same address. Buying a car and not registering it in your name but putting the next buyers name on it is fraud. Why? Evasion of fee and sales taxes for your purchase, if applicable in your state. Also the “flipper” can’t get insurance on it, in case of an accident, there is no coverage.
Another way flippers get caught is by a buyer who complains to state because of deal gone bad. Another way is the compliance officers in the dealer license organizations constantly review Craigslist for multiple entries over time by name and telephone or contact information.
And lastly, to approach this legal issue with “How can they prove it” attitude, sorry Jim is wrong. If you buy and sell and car for personal reasons then that’s OK. If you violate the state statutes and buy and sell for profit ONLY, then a person can get into legal trouble.
A vehicle is the most expensive thing we buy except for houses. The laws and restrictions were written to protect us as consumers and to control and protect dealers. Read other posts on here to see how “flippers” have seriously affected individuals financially.

Hi Don…scenario… Oregon man dies after collecting cars but not selling any of them for more than 60 years. Cars are all on his property which his wife has now inherited…cars and all. Wife now wants to sell them or junk them because most of them don’t run and all of them haven’t been registered for more than 10 years. She doesn’t have a dealer’s license and is 85 years old. If she sells more than 5 in a year is she considered a flipper?